What is a balloon payment?

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Various terms of financing, such as loans and lines of credit may sound familiar. However, there is another lending option that you might not have heard of: balloon payments. A balloon payment can be a suitable financing option for business owners who require a significant amount of capital upfront and have confidence in their ability to make a large payment at the end of the lease term. In this blog post, we will explain what a balloon payment is, how it works, and some advantages and disadvantages to consider before opting for this type of financing.

What is a Balloon Payment?

Simply put, a balloon payment is a lump sum payment that is typically required at the end of a lease term. Unlike traditional leases, where payments are spread out over the term, balloon payments often cover the remaining principal balance. Essentially, a balloon payment reduces the size of the monthly payments throughout the term. Therefore this reduces the overall cost of the lease agreement, making it more affordable for business owners. A balloon payment is normally applied to vehicle leasing.

How Does a Balloon Payment Work?

Suppose you need an amount of £500,000 for a new project. You apply for a loan that requires a £50,000 down payment and spread the remaining £450,000 over a 5-year term. However, instead of making equal monthly payments for five years to cover the balance, you make significantly smaller monthly payments, with a large balloon payment of £400,000 due at the end of the five years.

Advantages of Balloon Payments

The primary advantage of balloon payments is that they allow businesses to free up capital upfront for investment or growth. By deferring a large payment to the end of the payment period, you can reduce the number of monthly payments and interest rates. This makes repayments more manageable.

Disadvantages of Balloon Payments

Balloon payments come with various risks and disadvantages. Firstly, since the payment is deferred, businesses that may not generate enough profits to meet the payment may have difficulties making the payment. This is because a large lump sum is due at the end of the lease term. Secondly, balloon payments can come with higher interest rates than traditional leases. Finally, it will be your responsibility to keep the asset (for example a vehicle) up to the proper standard.

Contact Us

Balloon payments can be financially advantageous for business owners, but they come with risks and downsides. Before opting for a balloon payment, business owners need to understand the risks involved and how they can mitigate them. To find out more, contact us by calling 01494 611 456.

What are the tax benefits of leasing?

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It’s important to stay on top of your finances and make strategic decisions that benefit your business. One such decision is whether to lease or buy your assets. While there are advantages and disadvantages to each, leasing offers several tax benefits that can make a significant difference in your company’s financial picture. In this blog post, we’ll explore the top tax benefits of leasing and why it may be a smart choice for your business.

  1. Lower Monthly Payments

One of the most significant tax benefits of leasing is that it typically has lower monthly payments compared to buying. Since you’re only paying for the use of the asset, rather than the asset itself, you can spread out the cost over a longer period. This can help to lower your taxable income, which in turn reduces your tax liability. Additionally, lease payments are tax-deductible, which further lowers your tax bill. As a result, you have more cash flow to invest in other areas of your business.

  1. No Depreciation Worries

Another benefit of leasing is that you don’t have to worry about depreciation. When you buy an asset, the value of the asset decreases over time, which can result in a significant loss in value. However, this depreciation is tax-deductible, which can help to offset some of the loss. This can be especially advantageous if you’re leasing high-tech equipment that can quickly become obsolete.

  1. Flexible End-of-Lease Options

At the end of a lease, you typically have several options. You can renew the lease, return the asset, or purchase it outright if this is an available option. If you choose to return the asset, you don’t have to worry about selling it or dealing with any depreciation losses. However, if you decide to purchase the asset, you can typically do so at a reduced cost. This is because the lessor has already recouped some of the asset’s value through the lease payments. By taking advantage of this end-of-lease option, you can save money on the asset’s purchase and potentially reap more tax benefits.

In summary, leasing can offer many tax benefits for business owners, including lower monthly payments, no depreciation worries and flexible end-of-lease options. By considering these advantages you can make informed decisions about whether leasing is the right choice for your business needs. So, if you’re looking to maximise your tax benefits and improve your company’s financial position, leasing could be a smart and strategic option. Contact us today to find out more on 01494 611 456.

What rising interest rates mean to leasing equipment

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Interest rates have been a major concern for business owners who rely on leasing equipment. As the economic climate continues to change, interest rates might increase due to various factors, such as inflation. If you’re thinking of leasing equipment, a key aspect to consider is the impact of rising interest rates on your business operations. This blog post will provide insights into what rising interest rates mean to leasing equipment and tips on how you can mitigate their impact.

  1. Increased Monthly Payments

When interest rates rise, monthly payments on leasing agreements also increase. These higher monthly payments can impact your cash flow and business operations, particularly if your business is heavily reliant on leasing equipment. You might find yourself allocating more funds towards leasing payments, which can negatively affect investments in other areas of your business. With this in mind, you’ll need to re-evaluate your budget and forecasted expenses to ensure that you can handle the increased leasing payment costs. Here at WestWon we provide fixed monthly payments. Therefore, once the agreement has started, there will be no increase in the amount you are paying monthly.

  1. Limited Equipment Options

Rising interest rates can lead to increased costs in the leasing industry, causing some leasing companies to limit their equipment options. The cost of leasing equipment might go up since there will be a smaller pool of companies that can offer leasing at a reasonable cost. As a result, you may find that you can’t access all the equipment you require. To tackle this, you can plan by researching and securing leases for the equipment you need before rates rise.

  1. Purchasing Equipment Outright

Rising interest rates are a concern, and the potential of increasing leasing costs might prompt business owners to consider purchasing equipment outright. While this is an option, it might not be suitable for all business owners. Some equipment might be too expensive to purchase outright, and there’s the possibility of tying up capital in the process. Before deciding to purchase equipment outright, evaluate your business needs, goals, and budget to determine if it’s a viable option for your business operations.

Rising interest rates can become a cause for concern if your leasing equipment for your business. Business owners must understand the implications of rising interest rates on monthly lease payments and seek ways to mitigate the impact. Strategies include re-evaluating your business’ needs, purchasing equipment outright, and planning ahead to access equipment before rates climb. With these tips in mind, you can navigate the changing economic landscape with ease and lease equipment that supports your business growth. Get in touch with us today to find out more.

Do Bank of England interest rate increases impact my lease agreement?

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As a business owner, it is important to understand how different factors can impact your lease agreement. One such factor is the interest rate set by the Bank of England. A change in the interest rate can have a significant impact on your decisions. Therefore, it is important to know how it can affect your lease agreement. In this blog post, we will explore the ways in which the Bank of England interest rate increases, currently standing at 5.00%, can impact your existing lease agreement.

How Bank of England interest rates will have an impact on your lease agreement

Firstly, you should understand that a change in interest rates will not directly impact your lease agreement. In most cases, your lease terms will remain the same, and your monthly payments will continue as agreed. However, an increase in interest rates could lead to economic uncertainty, which could affect your business’s finances.

Linking to the above point, interest rate increases can also lead to an increase in inflation. This could result in an increase in the cost of goods and services. This in turn could impact your business’s expenses and revenue. If your lease agreement includes a clause that allows for adjustments in line with inflation, you may see an increase in your monthly lease payments. Here at WestWon, we offer fixed monthly payments, therefore once your agreement is activated the rate will remain the same.

If your current lease agreement is coming to an end and you are needing to negotiate a new lease agreement, the current interest rate can impact the new rate you are able to obtain.

A change in interest rates can impact the value of lease agreements. If the interest rate increases, the value of a lease agreement could decrease as the cost of borrowing increases. This could result in your lease agreement needing to change in order to reflect the change in lease value.

Finally, if you find yourself facing financial difficulties as a result of a rise in interest rates, you could consider restructuring your business finances to improve your cash flow. Where possible make sure to check the agreement length before entering into the agreement. Make sure you can commit to the entire monthly payment period.

Contact Us

As a business owner, it is important to understand the impact that Bank of England interest rate increases can have on your existing lease agreement. With careful consideration of the potential impacts, you can assess your lease agreement and help protect your business from unexpected increases in lease payments. Here at WestWon we provide fixed monthly payments. These increases therefore, once the agreement has been signed, will have no impact on your existing lease agreement. You can contact us on 01494 611 456 to find out more information.

What to Expect from the UK Asset Finance Market in 2023

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The UK asset finance market has been steadily growing since the start of the 21st century, and experts predict that this trend will continue well into 2023. In this blog post, we’ll explore what the future holds for asset finance in the UK, including projected growth rates, major players in the market, and key trends to watch out for.

Growth Predictions for 2023

According to recent reports by PwC, the UK asset finance market is expected to grow by a compound annual growth rate (CAGR) of 4.3% from 2020-2023. This would result in a total market size of around £67 billion by the end of 2023. This figure is significantly higher than what was recorded in 2018/19. This is when total assets under management (AUM) were only at £53 billion. These figures suggest that more businesses are taking advantage of asset finance and leasing options. This is to acquire necessary equipment and vehicles for their operations.

Major Players in the Market

The top five lenders in terms of AUM make up over 50% of the total UK asset finance market share as of 2019-2020. Santander leads with a 15% share, followed by Hitachi Capital (13%), Close Brothers Leasing & Asset Finance (12%), Lloyds Banking Group (9%), and Royal Bank of Scotland (7%). These lenders dominate due to their large customer base and expansive product portfolios that they offer across different sectors. Such as transport, hospitality, construction, and agriculture.

Key Trends to Watch Out For

One key trend that is expected to shape the way businesses access asset finance is digitalization. More lenders are offering online financing solutions which provide customers with greater convenience and flexibility. When it comes to obtaining financing for their assets. Additionally, technological advances have made it easier for financiers to analyse data quickly and accurately. This helps them assess creditworthiness faster than ever before. As a result, smaller businesses can now access financing more easily than ever before – something that was once reserved only for larger companies with a good credit rating.  Furthermore, increased competition means that customers can benefit from lower interest rates on their loans compared with what was available a few years ago.

The UK asset finance market is set to grow significantly over the next few years as more businesses take advantage of leasing options offered by leading lenders such as Santander or Hitachi Capital. Digitalization has opened up new possibilities for both lenders and borrowers alike; customers can now access financing quickly and easily while financiers benefit from improved analytics tools when assessing creditworthiness or setting loan rates. All these trends point towards an exciting future for asset finance in 2023!

Contact Us

Do you have growth plans for your business? If so, asset finance is a fast and effective way of catalysing your business growth. Give us a call on 01494 611 456 for asset finance options with industry leading rates! Alternatively, send an email to [email protected] and a member of our expert team will get back to you shortly.

What is the most popular month end date for UK limited companies?

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Technically, people often refer to a company’s month end date / yearend date, financial year end as “Accounts Reference Date.” Any reference to month end or yearend date does mean a company’s account reference date or financial year end. Below is a bit more information on a company’s most popular month end date.

To accurately get this data, you would have to go to Companies House and download all UK companies and their yearend date. This will be a challenging and time-consuming task.

WestWon has an extensive client base and contact information on UK companies in general. As part of our standard “Know Your Customer” requirements, we keep a record of companies’ yearend date. The following analysis is taken from our data of UK limited, plc and limited liability companies.

What is the most popular month end for UK limited companies?

March, 24.48% of companies have a March yearend date followed closely by December with 24.34%.

What is the least popular yearend date?

November, 3.05% of companies have a November yearend date, followed by February with 3.18%.

UK company yearend dates by month

Month                 % of companies

January               3.86%

February              3.18%

March                 24.48%

April                     6.34%

May                     4.84%

June                    7.28%

July                      4.86%

August                 5.57%

September         7.49%

October              4.71%

November          3.05%

December          24.34%

Can you choose what yearend date to have for your audited accounts?

Yes, you can therefore set your own date.

Can you change a yearend date?

Yes, but there are restrictions on how often this can be done.

Can you extend a yearend date?

Yes, again, there are restrictions on how often this can be done.

What factors should I consider as a business owner when thinking about my yearend date?

Surprisingly, lots of business owners do not give this any thought. In simplistic ways, if they start up a business in April, they have an April or May yearend and never get around to changing it.

March is most popular as it ties in with the HMRC tax year. December is equally popular as companies link their trading and success to a calendar year.

Seasonal variations then account for the other main reason when a business owner will choose their accounts reference date. For companies that experience most of their sales in the summer months, they would choose September as a year end. This is so they start off their accounting year quietly then business grows as opposed to see business just decline on a month by month basis if you choose May or June.

You could decide to have your yearend at a time of the year when business is quiet so there are no major debtors or creditors to show in the accounts.

Often, we would have December as our yearend to match our calendar year targets and objectives, however, getting business in, deals paid out and invoices paid in December is harder work. On the flip side, we have our yearend as June and when people ask us how business was last year, we have to work out if they mean a calendar or financial year.

In summary, the key consideration is what does your business do. What variations – if any – in business do you experience every month? Do you want to be thinking about your yearend when you have broken up for Christmas? It all depends on how you decide to run your business.

What is the most popular VAT quarter end?

March, June, September and December. 63.59% of companies will therefore file their VAT return for the same quarter. (Most UK companies will correlate their VAT quarter end period to their yearend).

Contact Us

If you would like more information on a company’s most popular month end date, or any other finance needs you may have, then please don’t hesitate to contact us. You can email us on [email protected], or alternatively you can call us on 01494 611 456. You can also see more over on our LinkedIn page.

Top tips to manage your business finances

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4 top tips for managing your business finances

There are several ways you can manage your business finances. However, in this blog, we will be discussing just 4. If you have any questions regarding business finances, or you would like to learn more, then please contact us. You can do this using our details below. Otherwise, please read on…

  1. Invest in growth

Investing in your business is one of the most important ways you can grow and expand your business. Making sure you invest in the future is essential. If you invest in your growth by setting aside money, your business will never be in trouble. It also shows people that you care about your business. We aren’t just talking about clients and customers here, where they will be impressed and persuaded by the amount of care you are taking in the business. We are also talking about future employees. If they see the amount of dedication that goes into the business, they are more likely to want to work for you. Employment is also essential for the growth and expansion of your business.

  1. Budget well

Budgeting well is the success to some companies, no matter the size of them. Setting up good financial habits early on can improve the health of your business’ cash flow. It can be a very simple process. Taking the time out to look at your cash flow both in and out of the business can only take up a small amount of time but can save you much more in the future. In terms of payment, it can also be a good thing to spread them out. This means you won’t be making large payments in full all at once.

  1. Plan ahead

Another thing to do is to plan ahead. The downfall of many businesses is that they won’t plan for the future or move with the times. Especially nowadays, making sure you plan for anything can be essential. It also comes with a lot of responsibility. For example, the green agenda sweeping the UK at the moment is huge, and sustainability for businesses is on the rise (as it should be). People are starting to think more about how they impact the environment and what they can do to better it. Here at WestWon we are proud of our green initiative to plant a tree for every month of a lease agreement. More about that can be found here.

  1. Do not be afraid of loans

You should never be afraid of taking out loans. If anything, finance and leasing can bring many added benefits to your business. This leads well onto my next point…

How can WestWon help?

Here at WestWon we provide finance for a range of assets, as well as agreements that can be tailored to you and your business. Leasing also offers many added benefits. You can preserve your existing lines of credit for the future, as well as always having the newest equipment. This is through implementing a recycling strategy. You can also protect your cash flow and keep it in the business to be used elsewhere. There are tax benefits as well as 100% of the rental being deductible against your company’s corporation tax.

Contact Us

If you would like more information on how you can manage your business finances, or any other finance needs you may have, then please don’t hesitate to contact us. You can email us on [email protected], or alternatively you can call us on 01494 611 456. You can also see more over on our LinkedIn page.

What is asset finance?

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Firstly, what is an asset?

An asset is an object or useful resource that holds value to a person. Assets can be owned by an individual, business, or government. An asset helps deliver a purpose to the user. Examples of  assets can be anything from cash to furniture.

What is asset finance?

Asset finance is the acquirement of equipment for a business with finance as the payment method. That meaning businesses can spread the cost of an asset over a period of time as opposed to paying upfront. This can provide businesses with a considerable amount of relief. Not only to their cash flow but also to their tax liability. This will be explained further in detail later in this blog.

The benefits of asset finance

Asset finance is a useful tool to businesses. As you can imagine, paying in full and upfront can be very damaging to a businesses’ cash flow. Whereas, asset finance allows companies to keep cash in the business to be spent on other projects.

Not only this, but businesses are able to deduct 100% of their rental’s tax liability against their corporation tax bill. Additionally, VAT liability on the asset will be distributed monthly along with the total amount payable.

It also provides businesses with an alternative line of credit. So, there is no need to use up a credit source that they already have.

Another reason as to why business choose the asset finance route is so that they can keep up to date with the latest equipment on the market. This is especially popular for those that seek access to the most recent technologies. Technology is ever evolving, so you are only losing money when you purchase a depreciating asset. But, by financing technology equipment allows companies to regularly upgrade their equipment. And consequently, with access to the most recent technologies, it allows businesses to remain competitive within their sector.

Contact Us

For any further questions on asset finance and how it might benefit your business, please don’t hesitate to give us a call on 01494 611 456. Alternatively, send an email to [email protected] and a member of our friendly team will get back to you.

Why more and more suppliers are offering finance to customers

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More and more suppliers are becoming enlightened to the benefits that offering finance to their customers can provide both them and their customers.

Quite simply put, by offering leasing many suppliers of ours have seen an increase in their sales. And quite understandably so, as this is a far more attractive option for their customers compared to that hefty upfront cost. Therefore, not only does this option benefit your customers but it will also benefit you. Throughout this blog I will be listing the advantages finance can offer both you and your customers.

There are several advantages to offering your customers an alternative finance option to paying cash up front. Just to name a few:

  • Breaking the budget barrier

Sometimes, the only thing holding customers back from making a buying decision is the lack of funds. Quoting a monthly rental figure will make it easier for your client to budget and finance their purchase.

  • Watch your sales surge

Often, a company will consider how to finance a purchase before they choose the equipment or supplier. Many sales are lost even before a prospect calls you. Talk about a monthly rental option and watch your sales surge.

  • Improve customer loyalty

Customers who choose finance are more likely to become returning customers by renewing their finance agreement with you. This is a great way to gain a long-term competitive advantage.

How leasing and finance helps your customers

Now let’s talk through why your customers will appreciate you offering a leasing option.

  • Cash flow advantages

Small, fixed monthly payments offer a huge advantage to your customer’s cash flow, whilst also regulating the return on their investment.

  • Spreading of VAT liability

Not only is the cost of their investment spread, but the VAT on that investment is distributed, also saving them from paying that lump sum from the get-go.

  • Tax planning

Using a lease rental agreement, 100% of the rental is deductible against a company’s Corporation Tax bill.

  • Your customers can remain competitive

With you making the latest equipment affordable to your customers with budget-friendly payment plans, it will most likely put them at an advantage to competitors in their industry.

  • Alternative funding lines

There is no need for your customer to use up an existing funding or bank facility.

  • “If it appreciates, buy it. If it depreciates lease it.”

Wise words from famous oil baron Paul Getty are smart advice to follow. Leasing will save your customers from losing money on depreciating assets, and instead give them the opportunity to renew their equipment once their agreement is over.

Contact Us

If you want to explore your options for providing finance to your customers, please contact of our sales team on 01494 611 456 and they’d be happy to advise you. Alternatively, you can drop an email to [email protected]. You can also see more over on our LinkedIn page.

Ever wondered why you should lease?

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Another supplier of finance

Below are many benefits of leasing. The first is being able to use another company that can lend you money is always a great thing. It means you won’t have to use up an existing line of credit such as a bank facility. This also gives you an extra level of insurance, an ‘insurance policy’ if need be. There is always the bank ready and available for you to use, however, having an extra line of funding could be the difference to how your business thrives.

Leasing is faster to organise

Here at WestWon we have a guarantee that we will have a decision with you in 24 hours, and if extra information is needed, your dedicated account manager will be in touch with you to arrange this. We will usually ask for management accounts, as well as other vital information that will provide useful to the funder. Due to this being the job we undertake daily, funders usually have a quick turnaround with us, whereas banks have been known to take longer when answering their customers.

Tax benefits

To pay all the VAT upfront, you will pay cash for the equipment in full. However, when you are completing a rental lease, you will only pay VAT on the rental part. This leads to the business having to borrow the VAT money. This will add up and ultimately raise the amount you end up having to pay. Tax benefits are also one of the most important things for businesses when they are looking to lease.

Other benefits of leasing

There are several other benefits of leasing, including those seen below:

  • Cash flow – able to keep funds in your business (for other projects/plans)
  • The latest equipment – able to have the latest equipment by implementing a recycling strategy
  • Pay for the equipment as you use it – businesses pay employees over time as they work, so why pay all the cost for equipment in advance?

Contact Us:

For further information on more benefits of leasing, or any further finance needs you may have, please give a member of our team a call on 01494 611 456. Alternatively, you can email us on [email protected]. You can also see more over on our LinkedIn page.

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